First home buyers in Victoria don’t have to wait until 1 July to reap the benefit of the recently announced stamp duty cuts. Stamp duty is normally attributed to being the single biggest fee in purchasing a property, shortly followed by lender’s mortgage insurance (where applicable).
Real Estate Institute of Victoria CEO Enzo Raimondo says what could easily be overlooked is that the 20 per cent cut in stamp duty which will come into effect from July (further cuts up to 50 per cent will be phased in by September 2014) announced in the Victorian State Budget early this month, will apply to many homes purchased now.
Raimondo said what has not been appreciated by a number of first home buyers is that stamp duty is paid when settlement of their purchase occurs, not when a contract is signed.
“Settlement occurs on the day the balance of the purchase price is paid and the property’s title document is handed over to the buyer,” he said.
“This means that if you are buying your first home right now, you meet the eligibility criteria, and your settlement date is 1 July or later, you will be eligible for the 20 per cent discount on stamp duty.
“Other assistance for first home buyers – the First Home Buyer Grant and Bonuses – apply from the date the contract is signed.
“Other key criteria for the stamp duty cut are that the total purchase price must not be over $600,000, it is your first home, and you must live in it as your primary place of residence.
“If you are looking to purchase at the moment, it is sensible to establish your eligibility with the State Revenue Office before you commit to a purchase. The first step is to look at the information at the SRO website at http://www.sro.vic.gov.au.”
(The stamp duty cut will be worth around $5,794 on a home valued at $565,000.)
A flood of new first home buyers is expected to swamp the market from July, which experts warn will put renewed upward pressure on house prices.
Some Victorian real estate agents are in fact advising expert home owners to postpone listing their homes until the cuts take effect.
Conversely first home buyers are being advised to enter the market now in order to beat the rush. The rationale being that if they wait they will face higher prices post-July 1 in the lower price ranges.
